Organizational design for life: Can Corporations be Reformed?

I first met Marjorie Kelly more than 15 years ago when we were both privileged to be participants in a series of colloquia organized by the late Willis Harman (then Executive Director of the Institute of Noetic Sciences) and Avon Mattison of Pathways to Peace. I was, from that first meeting, quite impressed with Marjorie’s intelligence and passion for positive change. She founded, and for 20 years published, Business Ethics magazine. She is the author ofThe Divine Right of Capital and recently,Owning Our Future: The Emerging Ownership Revolution.

Her recent article,Living Enterprise as the Foundation of a Generative Economy, raises fundamental questions about the economy, corporations, and generative ownership designs. Itis one of the most insightful and important articles I’ve ever read on the topic of organizing for sustainability. Here are a few excerpts. –t.h.g.

“What kind of economy is consistent with living inside a living being?” .…

You don’t start with the corporation and ask how to redesign it. You start with life, with human life and the life of the planet, and ask, how do we generate the conditions for life’s flourishing?

If you stand inside a large corporation and ask how to make our economy more sustainable, the answers are about incremental change from the existing model. The only way to start that conversation is to fit your concerns inside the frame of profit maximization. (“Here’s how you can make more money through sustainability practices.”) Asking corporations to change their fundamental frame is like asking a bear to change its DNA and become a swan. ……

Can we sustain a low-growth or no-growth economy indefinitely without changing dominant ownership designs?

That seems unlikely. Probably impossible. How, then, do we make the turn? How can we design economic architectures that are self-organized not around profit maximization, but around serving the needs of life? ……

In ownership design, there are five essential patterns that work together to create either extractive or generative design: purpose, membership, governance, capital, and networks. Extractive ownership has a Financial Purpose: maximizing profits. Generative ownership has a Living Purpose: creating the conditions for life. While corporations today have Absentee Membership, with owners disconnected from the life of enterprise, generative ownership has Rooted Membership, with ownership held in human hands. While extractive ownership involves Governance by Markets, with control by capital markets on autopilot, generative designs have Mission-Controlled Governance, with control by those focused on social mission. While extractive investments involve Casino Finance, alternative approaches involve Stakeholder Finance, where capital becomes a friend rather than a master. Instead of Commodity Networks, where goods are traded based solely on price, generative economic relations are supported by Ethical Networks, which offer collective support for social and ecological norms.

Ownership is the gravitational field that holds an economy in its orbit. Today, dominant ownership designs lock us into behaviors that lead to financial excess and ecological overshoot. But emerging, alternative ownership patterns – when properly designed – can have a tendency to lead to beneficial outcomes. It may be that these designs are the elements needed to form the foundation for a generative economy, a living economy – an economy that might at last be consistent with living inside a living being.

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